Ch.2 · Advantages and Limitations of Mutual Funds · medium
An investor buys 100 units at NAV of ₹20 and later redeems them at NAV of ₹25. What is the absolute return?
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EXPLANATION
Absolute Return = (Redemption NAV − Purchase NAV) ÷ Purchase NAV × 100 = (₹25 − ₹20) ÷ ₹20 × 100 = ₹5 ÷ ₹20 × 100 = 25%. The number of units held (100) is irrelevant for calculating percentage return.
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